The AWS/VMWare partnership

Disclosures: My employer is an AWS partner. This post is solely my personal opinion and does not represent the opinion of my employer or AWS. I have no knowledge of this partnership beyond what has been publicly announced. I also own a small number of shares of Amazon stock.

Last week, Amazon Web Services (AWS) and VMWare announced a partnership that would make AWS the preferred cloud solution for VMWare. AWS will provide a separate set of hardware running VMWare’s software¬†managed by¬†VMWare staff. Customers can then provision a VMWare environment from that pool that looks the same as an internal data center.

As others have pointed out, this is essentially a colocation service that just happens to be run by Amazon. I share that view of it, but I don’t take the view that AWS blinked. It’s true that AWS has eschewed hybrid cloud in favor of pure cloud offerings, and they’ve done quite well with that strategy.

I don’t think the market particularly cares about purity, nor do I think the message will get muddled. Here’s how I see this deal: VMWare sees people moving stuff to the cloud and they know that the more that trend continues, the smaller their market becomes. Meanwhile AWS is printing money but is aware of the opportunity to print more. Microsoft Azure, despite having an easy answer for hybrid, doesn’t seem to be a real threat to AWS at the moment.

But I don’t think AWS leadership is stupid or complacent, and this deal represents a low-risk, high-reward opportunity for them. With this partnership, AWS now has an entry into organizations that have previously been cloud-averse. Organizations can dip their toes into “cloud” without having to re-tool (although this is not the best long-term strategy, as @cloud_opinion points out). As the organization becomes comfortable with the version of the cloud they’re using, it becomes easier for AWS sales reps to talk them into moving various parts to AWS proper.

Now I don’t mean to imply that AWS is a sheep in wolf’s clothing here. This deal seems mutually beneficial. VMWare is going to face a shrinking market over time. With this deal, they at least get to buy themselves some time. For AWS, it’s more of a long game, and they can put as much or as little into this partnership as they want. For both companies, it’s a good argument to prevent customers from switching to Microsoft’s offerings.

What will be most interesting is to see if Google Cloud, the other major infrastructure-as-a-service (IaaS) provider will respond. Google’s strategy, up until about a year ago, has seemed to be “we’re Google, of course people will use us”. That has worked fairly well for startups, but it has very little traction in the enterprise. Google can continue to be more technically-focused, but that will hinder their ability to get into major corporations (especially those outside of the tech industry).

I don’t see that there’s a natural fit at this point (though I also wouldn’t have expected AWS and VMWare to pair up, so what do I know?). One interesting option would be for Google to buy Red Hat (disclosure: I also own a few shares of Red Hat) and make Open Shift its hybrid solution. I don’t see that happening, though, as it doesn’t seem like the right move for either company.

The VMWare-on-AWS offering will not be generally available until sometime next year, so we have a little bit of time before we can see how it plays out.

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